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Shares of Paytm parent company One97 Communications Ltd. witnessed a significant surge of over 9% on Friday, June 7. This uptick defies the typical 5% upper circuit limit, which has now been revised to 10% for the Paytm stock. At around 11 am, the Paytm stock was trading 8.24% higher at ₹375.20 per share on the National Stock Exchange.
The price band revision took effect from June 7, 2024, according to the NSE. This move follows the steep volatility observed in Paytm shares after the Reserve Bank of India (RBI) imposed restrictions on the Paytm Payments Bank. Circuit limits are implemented by stock exchanges to control excessive price fluctuations, preventing stocks from falling below a lower limit or rising above an upper limit.
Paytm shares closed 2% higher at ₹347.5 on Thursday. However, since January 31, 2024, when the central bank imposed stringent restrictions on the Paytm Payments Bank, the stock has lost 54% of its market value. Other stocks affected by the price band revision include Bharat Dynamics, Aether Industries, Hindustan Zinc, and Cochin Shipyard.
In a separate development, Paytm's share of the unified payments interface (UPI) market in India has declined for the fourth consecutive month. Data from the National Payments Corporation of India indicates that Paytm's UPI transaction volume dropped from 13% in January 2024 to 8.1% in May this year.
Paytm's financial performance has also been impacted by the RBI's actions. For the March 2024 quarter, the fintech giant reported widening losses of ₹550 crore, compared to ₹169 crore in the same quarter the previous year. Revenue from operations declined by 3% year-on-year to ₹2,267 crore, down from ₹2,334 crore in the corresponding quarter of 2023.
The March quarter financials of One 97 Communications only partially reflect the impact of the RBI's actions against the Paytm Payments Bank. The full extent of the impact remains to be seen in future financial results.
Source: Why are Paytm shares up 9% instead of the usual 5% upper circuit — Explained